Melbourne restaurant group Made Establishment has paid $2.6 million in backpay to 162 of its 430 staff after an external audit revealed they had been incorrectly paid.
The group, which includes MasterChef star and director George Calombaris, was first alerted to the problem by the Fair Work Ombudsman (FWO) in 2015.
The company blames “historically poor processes” during six years of rapid expansion when it came to classifying employees. The problem has also cost the company money with nearly half the staff being overpaid on their base salary alongside more than half who were underpaid.
The company does not plan to ask staff who were overpaid to pay back the money.
The restaurants involved include the popular CBD Greek diner The Press Club, Gazi and Hellenic Republic. The street food chain Jimmy Grants is not involved.
The depth of the problem emerged after Made appointed Troy McDonagh as its new CEO late last year and problems were revealed during an internal review. He engaged KPMG to investigate at the start of 2017, leading to the discovery the 162 staff had not been paid their full overtime payments.
After dragging on for more than a year, the problem only came to a head when former Swisse Wellness CEO Radek Sali become a significant shareholder and there was a shakeup of the board. A new CEO was appointed and Sali is now Made Establishment’s chairman.
McDonagh said to avoid any confusion or dispute, the calculation of payments had been based on employees working a regular 38-hour week, and all overtime calculated at the highest overtime rate of 200%. The investigation stretches back to 2011.
“The payments of money owed to employees varied with the average back-payment to employees just over $16,000,” he said. “We will work collaboratively with FWO through this process.”
Staff were notified yesterday and the company issued a statement about correcting the problem in a sector where the FWO routinely has to intervene to deal with the exploitation and underpayment of workers.
Calombaris apologised for what happened, saying the HR and payroll systems “were clearly inadequate” to deal with the rapid expansion over the past six years.
“I am so sorry we have messed up and let you down on a fundamental issue, which is to ensure our people are paid their full entitlements,” he said in the email to staff.
“I am devastated by what has happened, and we have been working extremely hard to fix this. I want to be clear that getting it right means ensuring that every single one of our team members is paid what they are entitled to.”
Calombaris conceded the issue should have been tackled sooner.
“Regrettably, our attention to detail at that time wasn’t at a level it should have been, but we now have a CEO and a Human Resources Manager in place, supported by good processes and systems to properly support the business,” he said.
Any former employee who thinks they may have been affected should contact the company via email at hrenquiries[at]madeestablishment[dot]com[dot]au.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.